You don’t have to be penniless to file bankruptcy. You don’t have to have your back against the wall. And you don’t have to lose everything to get a financial fresh start. Don’t wait until you hit rock bottom to file bankruptcy.
Don’t deplete your savings trying to avoid bankruptcy
57 percent of Americans have less than $1,000 in savings, and 69 percent have less than $5,000. If you’re one of those who actually have a savings fund, don’t deplete it in an attempt to stave off bankruptcy. In most cases, savings funds can be protected in bankruptcy. If you give those funds away then wind up filing bankruptcy anyway, that’s money you’ve simply donated to creditors for no good reason. Payments to creditors within a year of a bankruptcy filing can also be “scratched back” by a bankruptcy trustee. Don’t surrender your savings.
Don’t empty your retirement accounts
Retirement accounts are long-term investments. In most cases, you should not tap retirement savings to pay short-term debts. Almost all types of retirement accounts can be exempted in bankruptcy, which means you will be able to keep those accounts. The U.S. Bankruptcy Code protects retirement accounts from liquidation, so in many cases it makes much more sense to file bankruptcy than it does to liquidate or borrow from retirement savings.
Don’t sell off your assets
Most of our bankruptcy clients keep all of their assets. All assets. Lee Legal emphasizes maximization of asset protection. So selling off assets when you should be filing bankruptcy usually means giving away property to creditors instead of keeping it for yourself. Protecting assets in bankruptcy does require foresight and expertise. If you have large, liquid assets or uncommon assets, talk to a lawyer as soon as you can because timelines are important in bankruptcy. Definitely disclose to counsel before (or after) you liquidate any property prior to filing.
Don’t lose hope
Bankruptcy is hope in the form of a financial fresh start. Using up or giving away or selling off everything you own is desperation, not hope. Instead, that’s the fast track to rock bottom. Sometimes, people hit rock bottom hard and fast, and those folks need help, too. Nevertheless, most people can see bankruptcy on the horizon well before they hit rock bottom. If you think that bankruptcy may be in your financial best interest at some point in your future, consider consulting an experienced bankruptcy attorney to explore exemption planning and asset protection before you even get close to hitting rock bottom.
Don’t wait until you hit rock bottom to file bankruptcy
When you emerge from bankruptcy you will want to have a savings cushion. You will want to have your retirement account. And you will be glad that you didn’t sell your property to pay creditors who will be discharged in bankruptcy, anyway. If you exhaust all of your assets before you file bankruptcy, your fresh start just won’t be as effective.
Once you hit rock bottom, there’s no digging any further. Don’t wait until you hit rock bottom to file bankruptcy. If you live in the Washington, D.C. area and are considering filing bankruptcy, call Lee Legal at (202) 448-5136.